Business / Corporate

Tesla opens Chinese plant as era of real EV competition in the country begins

Bloomberg

Elon Musk was apparently excited enough about Tesla Inc.’s prospects in China that he was moved to dance, just as shares of the maker of electric cars hit new highs.

The chief executive officer awkwardly waltzed across a stage at Tesla’s new factory outside of Shanghai on Tuesday during an event to hand over the first Model 3 sedans to the public. Musk, 48, also elaborated on previously announced plans to produce the upcoming Model Y crossover at the plant.

“Ultimately, Model Y will have more demand than probably all of the other cars of Tesla combined,” Musk said, reiterating a prediction made during the company’s last earnings call.

Tesla shares have surged more than 80 percent since Oct. 23, when the company reported a surprise profit and said the Model Y will launch this summer, months ahead of schedule.

The kickoff of Model 3 deliveries to local customers marks a major step in Musk’s global push for electric vehicle domination and heralds what could be the dawn of real competition in the world’s largest EV market. Local production is allowing Tesla to drop prices of the car, narrowing the price premium relative to models from Chinese manufacturers NIO Inc. and Xpeng Motors, and undercutting global giants such as BMW AG and Daimler AG.

Musk also said Tesla plans to open a design-and-engineering center in China so that it can eventually develop a new car there.

The company named after famed inventor Nikola Tesla, who died 77 years ago today, will now need to avoid a repeat of the glitches it experienced at its original car factory in California. Tesla went through months of what Musk called “production hell” as it ramped up Model 3 production starting in 2017. After consistently falling well short of the CEO’s ambitious targets, the company burned through billions of dollars and came within weeks of running out of money.

The China plant is already assembling 1,000 cars a week and aims to double that rate over the next year, Song Gang, the manufacturing director at the facility, said Dec. 30. The company has said it plans to ramp up production to 150,000 Model 3 vehicles a year, or about 3,000 a week, when the first phase of the factory is completed.

Tesla plans to boost production capacity to 500,000 a year after the following phase, though it isn’t clear when exactly Tesla expects to achieve those goals.